Softline, an international IT solution and service provider with Russian roots, started trading today on the London Stock Exchange with a secondary listing in Moscow. New shares worth $400 million were sold at $7.50 apiece, valuing Softline at about $1.5 billion, according to a company statement cited by Bloomberg.
The company initially targeted a valuation of around $2 billion; however the IPO, which came just after a period of turbulence for technology stocks on the global markets, was priced at the bottom end of the marketed range.
“We are not going to participate in the IPO this time due to high uncertainty regarding the way the market views Russian tech stories,” Bloomberg quoted Konstantin Asaturov, a fund manager at Sistema Capital in Moscow, as saying.
However, Asaturov’s firm could still consider buying the stock after the initial IPO fluctuations, he said.
Targeting emerging and advanced markets
Softline’s IPO proceeds will be used to develop and execute the company’s growth strategy, “a combination of organic expansion and M&A transactions,” Igor Borovikov, chairman and founder, said in an earlier statement quoted by Reuters.
This strategy includes expanding within emerging markets, as witnessed by the company’s recent moves in the Baltic states, Belarus and Egypt.
“Compared with developed markets, GDP growth is twice as fast (in emerging markets) and IT penetration is around 3-4 times lower,” CEO Sergey Chernovolenko said in a recent interview, quoted by Reuters.
Softline, however, is keeping an eye on Western Europe and North America, however.
Born in Russia in 1993, Softline is now an international group with offices in 55 countries and 95 cities — mostly in Eastern Europe, the Americas and Asia. Its offering focuses on digital transformation, cloud services and cybersecurity. In 2020, the group’s consolidated turnover neared $2 billion, up 13.2% year-on-year.
Around 40% of this turnover came from markets outside Russia, noted Reuters.
That same year, the company moved its headquarters from Moscow to London, while the share of its international business reached 45%. Softline acquired controlling stakes in German eponymous company Softline AG and in Embee, an Indian IT company specialising in cloud services, software licensing, cybersecurity and system integration services. Softline also bought the software development outsourcing business of Aplana Group, a Russian company.
